Employee financial wellbeing
The question of whether employers should be responsible for staff financial health is a complex and increasingly debated topic. Whilst there appears to be common agreement that employers do have a role to play in supporting their employees' well-being, including paying them fairly, just how far that responsibility should extend is under scrutiny, with varying perspectives inclusive of:
Employee well-being: Financial stress can have a significant impact on employees' mental health, productivity, and overall well-being. Recognizing this, some argue that employers should take an active role in ensuring a financial wellness for all of their staff to create a positive work environment. Others argue that beyond providing safe and pleasant work conditions and fair payment for work done, the employer should have no further involvement with the private lives of their employees.
Employee benefits: Many employers already offer benefits such as retirement plans, health insurance, and employee assistance programs to support their employees' financial and overall well-being. Certainly these benefits can contribute to employees' financial security and alleviate some financial stress; but when employees don’t have the knowledge to manage their living costs, savings, investments, retirement costs, loans and mortgage costs; should an employer be doing more to help?
Business impact: Financially secure employees may be more focused, motivated, and productive, which in turn should achieve a positive impact for any company. These employees may also be less likely to experience financial emergencies that can result in absenteeism or reduced job performance. But how do companies accomodate employees who continue to live beyond their means, regardless of their pay levels? Should they be making additional payments for these people or garnering a part of their pay into pensions or loans repayments; and if so, what happens to fairness for other employees who are more fiscally “responsible”?
Personal responsibility: There are many that argue that personal financial health is primarily the responsibility of individuals. They contend that employees should take charge of their own financial well-being by making wise financial decisions, managing their expenses, and investing in their own financial education. However with so many current media reports on increased food bank use and personal loan and mortgage defaults, by persons who are are earning well higher than average pay, can we really assume that everyone has equal skills and circumstances to be able to take responsibilty for personal financial health?
Resource constraints: Employers typically have limited resources so are unlikely to be able to bear responsibility for their employees' financial health across the course of their lifetimes. Even the provision of comprehensive expert financial advice for employees can be costly, particularly for small businesses or organizations with limited budgets. Some will argue that there are already a swathe of external and often free resources available for financial education, counseling, and support to help employees to enhance their financial literacy and improve their financial situation. Again though, this assumes the the complexities of budgetting and forecasting can be easily learnt by anyone at anytime….
Ultimately, the level of responsibility that employers should assume for the financial health of their staff is for now just a matter of perspective that will depend on factors such as the size of the organization, industry norms, and the specific needs of the workforce.
However with government administrated pension funds falling short and driving employees to work for longer, with mismangement of private pension funds leaving retirees in the lurch through no fault of their own, with spikes for costs of living be it for rentals, groceries and/or energy supply, and with ongoing pressures on community and health care support for an increasingly aged population; at some point, legislators may start to push employers further to fund the difference. Perhaps a balanced approach today that combines employee benefits, education, and support, along with individual accountability, can help foster a healthier financial environment in the workplace and in our societies?
About the Author
Leanne Morris is well known as a both an outspoken advocate and critic of the HR profession. With long standing networks across all specialist areas of the function, and a multi- continent work history, she is a sought after subject matter expert on international HR hiring trends and HR hiring best practice.